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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?

Zacks Equity Research
·4-min read

Making its debut on 05/05/2010, smart beta exchange traded fund iShares MSCI USA Equal Weighted ETF (EUSA) provides investors broad exposure to the Style Box - All Cap Blend category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

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These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Managed by Blackrock, EUSA has amassed assets over $444.51 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.

The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With one of the least expensive products in the space, this ETF has annual operating expenses of 0.09%.

It's 12-month trailing dividend yield comes in at 1.51%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector - about 15.90% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Chewy Inc Class A (CHWY) accounts for about 0.25% of total assets, followed by Zoom Video Communications Inc Clas (ZM) and Veeva Systems Inc Class A (VEEV).

Its top 10 holdings account for approximately 2.1% of EUSA's total assets under management.

Performance and Risk

So far this year, EUSA has lost about -8.93%, and is down about -5.54% in the last one year (as of 08/15/2022). During this past 52-week period, the fund has traded between $68.09 and $90.84.

EUSA has a beta of 1.08 and standard deviation of 25.12% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 631 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P Total U.S. Stock Market ETF (ITOT) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $44.20 billion in assets, Vanguard Total Stock Market ETF has $276.39 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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iShares MSCI USA Equal Weighted ETF (EUSA): ETF Research Reports
 
Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares Core S&P Total U.S. Stock Market ETF (ITOT): ETF Research Reports
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
Chewy (CHWY) : Free Stock Analysis Report
 
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